There are more and more families finding themselves on the brink of financial disaster each and every year. What is the main reason? They fail to truly consider the implications of a few major decisions, and stress over the simple day-to-day stuff. Many adults simply were not taught basic financial planning, and it is coming back to haunt them now that they need those skills. With that in mind, here are five mistakes you can avoid now to keep your financial outlook rosy:
Buying more than you can pay off each month on your credit cards
Even if you are able to get a low-interest credit card or loan, buying excessively on credit can and will bury you. Carrying a serious balance on credit cards is an absolute recipe for disaster; the finance charges alone can be a back-breaker! Say you spend $20,000 buying a car on credit. And say you get 5.9% financing. Even paying a few hundred dollars a month, you are looking at accruing roughly $1,000 in finance charges your first year. It is likely you don’t have $1,000 lying around to throw away -- otherwise you wouldn’t have just taken out a $20,000 loan.
Just a few decades ago buying heavily on credit was virtually unheard of. Kids were taught early on what a huge no-no this was. It’s time we relearn this lesson and eliminate buying on credit once and for all.
Making Financial Decisions Under Stress
Going through great stress or emotional turmoil leaves us all vulnerable to making horrendous financial choices. Feeling any kind of pressure in other aspects of your life can, quite simply, force you to make poor decisions that will get you into trouble. If it is possible, put it all off until you are on steadier ground – you will thank yourself later.
Inadequate Auto, Life, Home, Health, Insurance Against Catastrophe
Families are ruined every day because they are not properly protected against disaster. In addition to a bare minimum of catastrophic-level health insurance (a burst appendix can cost some people as much as a year’s income!) you absolutely must insure your home and possessions. It is expensive, yes, but not worth the risk of losing all of your earthly positions. You should also consider protection against any disaster common to your part of the country (floods, hurricanes, earthquakes, tornadoes, etc.). Uncomfortable as it may be, it is also good to have some kind of life insurance to protect your loved ones.
Giving In To High Pressure Sale
A sucker really is born every minute. And there is a salesman waiting to take advantage of every … single … one of them. Do not do the bad guys any favors; never enter into any financial decisions if you suspect you are, in any way, being subjected to pressure tactics or one-time offers. If a deal is so great that it cannot wait for you think it through or get a second opinion, you can be pretty certain that there is a catch.
Failure to Plan For Your Financial Future
It is sure as heck a lot easier to put off the tough choices now and get to them someday in the future. There is no one who has not done it at some point. Years into the future, though, many families find that they are neck deep in debt with no way to climb out other than bankruptcy. If you do not have the tools at your disposal, pay a little bit and talk to a financial planner so you can be debt free down the road. Find other alternatives to bankruptcy.
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